“Following a period of sustained political turmoil, 2020 marks a new era for the UK. Whilst our commercial real estate sector will feel the impact of global trends including low interest rates and climate change, the next 12 months present some valuable areas of growth that investors and developers in the sector should look to harness.” said Dr Nick Axford, global head of research at Avison Young.

Among the trends impacting real estate strategies and business identified by Avison Young:

Lower for longer: How investors are dealing with a low inflation, low interest rate world

Building resilience: Cities across the world are leading the charge in responding to climate change, to ensure economic, social and environmental sustainability

Let’s talk about flex: The future of flexible office spaces

Rebirth of retail: The re-invention of the retail sector into a technology-driven experiential offering

Future growth: The opportunities and challenges of recreational and medical cannabis legalization

“The political focus is quickly shifting to the debate over the country’s future trading arrangements with the EU, so we are still living with heightened uncertainty on both domestic and international fronts,” added Axford. “Occupiers and investors are faced with a complex pattern of shifting forces, with traditional cyclical concerns often outweighed by structural shifts related to the impact of technology, globalization and climate change. Through our research and sector knowledge we will work to help our partners understand the economic, geopolitical and business drivers, navigate the current market and prepare real estate strategies that have resilience for the future.”

The 30-page report includes analysis of all major regions and cities in the UK. These insights show a strong demand for large-scale office space in Birmingham, as well as new development starts in Bristol, underpinned by the significant growth in the IT sector. The retail sector continues to go through a well-documented period of readjustment, with rents continuing to fall during the year, although there are pockets of resilience specifically in prime locations.

Robust demand coupled with significantly limited supply in the UK’s major office markets will underpin the case for continued rental growth, with a number of developments likely to start during the year. In the industrial sector, AY expects the imbalance between demand and supply to moderate in 2020 but remain sustainable and supportive of healthy rental growth.

The firm expects to see a continued increase in the importance placed on the need to address the climate change crisis, with more companies setting zero carbon targets for the year ahead.

The current pandemic certainly isn’t helping with the UK’s housing shortage. Housebuilders may be going back on site but do we need to move away from the more traditional methods of construction if we are going to have any chance of meeting the country’s housebuilding targets, asks Caroline Hanratty.